Hungary’s Finance Minister Péter Oszkó confirmed earlier press reports that government will forgo HUF 19 billion in outstanding debt (mostly overdue taxes) to ailing Russian-owned airline Malév, formerly Hungary’s national carrier. Converting the receivables into a stake the state could become a majority owner in the airline, he added.
A hidden amendment proposal submitted to the 2008 Final Accounts Act that gives the government a blank check to forgo HUF 19 bn public debt is in fact about Malév, Oszkó confirmed a previous report by news portal index.hu.
Oszkó said the state could set Malév on a track where it can operate efficiently.
"The Hungarian state may acquire a majority stake in Malév by converting its claims, i.e. the company’s HUF 19 bn worth of tax debt and other public dues into an ownership stake," Oszkó told Duna Television late on Thursday. Talks are still in progress, he noted, underlining that the state would not pay a dime for the majority holding, but forgo Malév’s debts.
Oszkó stressed the government does not want to repurchase the stake it sold during the carrier’s privatization. Instead it will become its co-owner with Russian-controlled AirBridge by turning its existing claims into shareholding.
This was not the first time the Finance Minister mentioned obtaining a majority stake, but most of the previous press reports were about the state becoming a minority owner in Malév. Regardless of the size of the stake the government will get, the carrier’s rivals are almost certain to turn to Brussels with complaints about forbidden state aid.
The deal itself would not be a problem, but the market-based values might be. Under the deal the state would value Malév at several tens of billions of forints, while the capital of the carrier that was sold off less than three years ago for HUF 200 m is already a negative figure and its debts are estimated at HUF 70 bn (its debts totaled HUF 50 bn at end-2008).